[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]









                 EXAMINING THE RENEWABLE FUEL STANDARD

=======================================================================

                                HEARING

                               BEFORE THE

                      SUBCOMMITTEE ON THE INTERIOR

                                AND THE

                      SUBCOMMITTEE ON HEALTH CARE,
                   BENEFITS AND ADMINISTRATIVE RULES

                                 OF THE

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 16, 2016

                               __________

                           Serial No. 114-154

                               __________

Printed for the use of the Committee on Oversight and Government Reform





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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                     JASON CHAFFETZ, Utah, Chairman
JOHN L. MICA, Florida                ELIJAH E. CUMMINGS, Maryland, 
MICHAEL R. TURNER, Ohio                  Ranking Minority Member
JOHN J. DUNCAN, Jr., Tennessee       CAROLYN B. MALONEY, New York
JIM JORDAN, Ohio                     ELEANOR HOLMES NORTON, District of 
TIM WALBERG, Michigan                    Columbia
JUSTIN AMASH, Michigan               WM. LACY CLAY, Missouri
PAUL A. GOSAR, Arizona               STEPHEN F. LYNCH, Massachusetts
SCOTT DesJARLAIS, Tennessee          JIM COOPER, Tennessee
TREY GOWDY, South Carolina           GERALD E. CONNOLLY, Virginia
BLAKE FARENTHOLD, Texas              MATT CARTWRIGHT, Pennsylvania
CYNTHIA M. LUMMIS, Wyoming           TAMMY DUCKWORTH, Illinois
THOMAS MASSIE, Kentucky              ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina         BRENDA L. LAWRENCE, Michigan
RON DeSANTIS, Florida                TED LIEU, California
MICK MULVANEY, South Carolina        BONNIE WATSON COLEMAN, New Jersey
KEN BUCK, Colorado                   STACEY E. PLASKETT, Virgin Islands
MARK WALKER, North Carolina          MARK DeSAULNIER, California
ROD BLUM, Iowa                       BRENDAN F. BOYLE, Pennsylvania
JODY B. HICE, Georgia                PETER WELCH, Vermont
STEVE RUSSELL, Oklahoma              MICHELLE LUJAN GRISHAM, New Mexico
EARL L. ``BUDDY'' CARTER, Georgia
GLENN GROTHMAN, Wisconsin
WILL HURD, Texas
GARY J. PALMER, Alabama

                   Jennifer Hemingway, Staff Director
            Ryan Hambleton, Senior Professional Staff Member
                          William Marx, Clerk
                 David Rapallo, Minority Staff Director
     Subcommittee on Health Care, Benefits and Administrative Rules

                       JIM JORDAN, Ohio, Chairman
TIM WALBERG, Michigan                MATT CARTWRIGHT, Pennsylvania, 
SCOTT DesJARLAIS, Tennessee              Ranking Minority Member
TREY GOWDY, South Carolina           ELEANOR HOLMES NORTON, District of 
CYNTHIA M. LUMMIS, Wyoming               Columbia
MARK MEADOWS, North Carolina         BONNIE WATSON COLEMAN, New Jersey
RON DeSANTIS, Florida                MARK DeSAULNIER, California
MICK MULVANEY, South Carolina, Vice  BRENDAN F. BOYLE, Pennsylvania
    Chair                            JIM COOPER, Tennessee
MARK WALKER, North Carolina          MICHELLE LUJAN GRISHAM, New Mexico
JODY B, HICE, Georgia                Vacancy
EARL L. ``BUDDY'' CARTER, Georgia
                                 ------                                

                      Subcommittee on the Interior

                  CYNTHIA M. LUMMIS, Wyoming, Chairman
PAUL A. GOSAR, Arizona               BRENDA L. LAWRENCE, Michigan, 
BLAKE FARENTHOLD, Texas                  Ranking Minority Member
KEN BUCK, Colorado, Vice Chair       MATT CARTWRIGHT, Pennsylvania
STEVE RUSSELL, Oklahoma              STACEY E. PLASKETT, Virgin Islands
GARY J. PALMER, Alabama























                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on March 16, 2016...................................     1

                               WITNESSES

Mr. Christopher Grundler, Director, Office of Transportation and 
  Air Quality, U.S. Environmmental Protection Agency
    Oral Statement...............................................     5
    Written Statement............................................     8
Dr. John M. DeCicco, Research Professor, University of Michigan 
  Energy Institute
    Oral Statement...............................................    11
    Written Statement............................................    13
Ms. Kelly Stone, Policy Analyst, ActionAID USA
    Oral Statement...............................................    34
    Written Statement............................................    36
Mr. Wallace E. Tyner, James and Lois Ackerman Professor, 
  Department of Agricultural Economics, Purdue University
    Oral Statement...............................................    40
    Written Statement............................................    42
Mr. Nicolas D. Loris, Herbert and Joyce Morgan Fellow, The 
  Heritage Foundation
    Oral Statement...............................................    50
    Written Statement............................................    52

                                APPENDIX

Statement for the Record of Mr. Blum of Iowa.....................    92
Questions for the Record for Mr. Christopher Grundler, submitted 
  by Chairman Lummis.............................................    94

 
                 EXAMINING THE RENEWABLE FUEL STANDARD

                              ----------                              


                       Wednesday, March 16, 2016

                  House of Representatives,
          Subcommittee on Interior, joint with the 
        Subcommittee on Health Care, Benefits, and 
                              Administrative Rules,
              Committee on Oversight and Government Reform,
                                                   Washington, D.C.
    The subcommittees met, pursuant to call, at 2:00 p.m., in 
Room 2154, Rayburn House Office Building, Hon. Paul Gosar 
[chairman of the Subcommittee on Interior] presiding.
    Present from Subcommittee on Interior: Representatives 
Gosar, Buck, Russell, Lawrence, and Cartwright.
    Present from Subcommittee on Health Care, Benefits, and 
Administrative Rules: Representatives Jordan, Walberg, 
DeSantis, Walker, Carter, Cartwright.
    Also Present: Representative Welch.
    Mr. Gosar. The Subcommittees on Interior and on Health 
Care, Benefits, and Administrative Rules will come to order.
    Without objection, the chair is authorized to declare a 
recess at any time.
    I am going to acknowledge myself for my introductory 
statement.
    The Renewable Fuel Standard, or RFS, is a mandatory minimum 
of biofuels that must be used in the national transportation 
fuel supply. The program was first established by Congress in 
2005 and was later expanded in 2007 under the Energy 
Independence and Security Act to mandate that 36 billion 
gallons of biofuels must be blended into the fuel supply by 
2022. The original goals of the RFS were to help curb air 
pollution, reduce greenhouse gas emissions, and reduce U.S. 
energy dependence through the use of biofuels.
    Much has changed since the first 10 years that RFS has been 
in effect. When the original laws were passed, Americans had 
serious concerns about the rising price of gas and about our 
dependence on foreign oil. However, since almost immediately 
after the law was passed, the U.S. has experienced an 
extraordinary energy supply boom. Today, gasoline is selling 
for historically low prices. The assumption under the RFS that 
demand for oil would continue to rise has not been realized, 
and we must take a hard look at how this affects the success of 
the program.
    Unfortunately, the way the law was written makes it 
incapable of adequately adjusting to these changes. The EPA is 
responsible for developing and implementing regulations for the 
RFS, but due to the challenging reality the RFS operates in, 
EPA has continually been late in issuing its renewable fuel 
obligation levels and has often had to issue these annual 
renewable fuel mandates retroactively.
    This past November, EPA issued the final renewable fuel 
volume levels for the year 2014, 2015, and 2016. This would 
make 2016 one of the few years EPA has issued that mandate on 
time.
    In addition, EPA has often elected to use its waiver 
authority to issue volume mandates that are below the levels 
set by law further showing how the original mandates are 
unsustainable in today's reality.
    The current RFS mandates have caused the Nation's fuel 
supply to reach the blend wall of 10 percent ethanol 
incorporated into the fuel supply. This blend wall barrier is 
the highest level of ethanol blended into fuel that can be 
sustained in the current automobile market. If any percentage 
higher than this is used in vehicles, serious engine problems 
can occur in older cars or void warranties in newer models. 
This creates a serious problem for consumers.
    The implementation of the RFS has also created some 
unintended and adverse consequences. The rapid expansion of 
biofuel production using corn has caused an increase in food 
prices, which in turn hurts the poorest and most vulnerable in 
our society both at home and abroad.
    Furthermore, some studies have shown that current ethanol 
production may actually contribute to higher greenhouse gas 
emissions. Accordingly, in a 2011 National Academy of Science 
study, EPA's own emissions analyst found corn ethanol to have a 
higher lifecycle greenhouse gas emission than that of gasoline. 
This is in direct contrast with the original RFS goal of 
improving air quality. These are just some of the problem that 
must be addressed as we examine the effectiveness and viability 
of the RFS as a program.
    Today, we are joined by Mr. Christopher Grundler from the 
EPA Office of Transportation and Air Quality. I hope that the 
EPA can help us help you. Tell us what Congress needs to do to 
make it able to do its job.
    I also hope to hear about the effects of the RFS from other 
members of the diverse panel that we have here today. I look 
forward to having a productive discussion with our witnesses on 
what we can do to best address the problems in the RFS program. 
I want to thank you for all taking the time to appear today, 
and I look forward to your testimony.
    Mr. Gosar. And with that, seeing that the ranking member is 
not here, I am going to recognize the vice ranking member, Matt 
Cartwright, for his opening statement.
    Mr. Cartwright. Thank you, Dr. Gosar and Chairman Jordan, 
for holding today's hearing. I also want to thank our witnesses 
for coming today and sharing your expertise with us.
    Renewable energy and energy efficiency technology play an 
instrumental role in improving America's energy independence 
and in reducing carbon emissions. Certainly, renewable energy 
sources are our future. Congress has to help facilitate and 
expedite our inevitable transition away from fossil fuels and 
the Renewable Fuel Standard, the RFS, can play an important 
role in the transition.
    Established in 2005 and expanded in '07, the RFS was 
crafted by Congress to address our nation's dependence on 
foreign oil, as well as spark clean energy innovation and job 
creation. The RFS requires the EPA to issue annual standards on 
four different categories of renewable fuels: total, advanced, 
biomass-based diesel, and cellulosic. These standards identify 
the percentage of each biofuel category that producers and 
importers of gasoline and diesel must blend into transportation 
fuel, heating fuel, and jet fuel.
    I hope we can all agree that the goals of the RFS are 
laudable and deserve all of our support. And the industry has 
certainly achieved some success in meeting them. Biofuels, and 
especially advanced biofuels, hold the promise of dramatically 
reducing the carbon and environmental footprint of our 
transportation sector. According to the biotech industry, over 
its 10-year lifespan, the RFS has reduced U.S. transportation-
related carbon emissions by 589.33 million metric tons.
    Moreover, the industry is creating jobs. The cellulosic 
biofuel industry operates commercial biofuel plants in Kansas, 
Iowa, Mississippi, and Florida. Twenty States have biofuel 
facilities at different levels of development.
    However, we do have to acknowledge the growing pains this 
industry has faced over the past decade, and I do have my own 
concerns. I have concerns about the RFS's impact on 
agriculture, food prices, and a series of unintended but 
potentially serious impacts on our environment. I am concerned 
about the RFS's influence on the conversion of forestlands and 
wetlands to corn and soy fields. And I am concerned about the 
different estimates of the carbon footprint of corn ethanol. 
And I want to understand better what the true current and 
future climate impact of the RFS will be.
    Looking forward, I hope that the progress of the biofuels 
industry, which, without the RFS, never would have occurred, 
can lay a foundation for a bright future for renewable fuels. 
Carbon reductions and environmental benefits have thus far 
fallen short of the heights we may have hoped for, and 
cellulosic biofuels have not reached the production levels 
predicted when the RFS was first established.
    But despite this, I still see a bright and essential future 
for renewable fuels, and the RFS is the most important policy 
tool we have to allow this industry to continue to innovate and 
expand. The biotech industry asserts that cellulosic and 
advanced biorefineries have now reached commercial status and 
that additional biorefineries can be built at lower capital 
costs.
    I hope that the recent standards announced by EPA can 
provide certainty and propel us toward the advanced fuels that 
will truly meet the original goals of the RFS. I hope to work 
with my colleagues to get over hurdles such as the E10 blend 
wall and constraints in the supply chains that have limited the 
industry.
    Our reliance on fossil fuels to power our transportation 
sector is unwise and unsustainable, and Congress was smart to 
provide a path for renewable fuels. The implementation of the 
RFS has raised valid concerns from many corners, but I believe 
the industry is ready to take a major step forward toward the 
advanced biofuels that will have an important and positive 
impact on the environment, on jobs, and on the transportation 
sector.
    I look forward to hearing from our witnesses today better 
to understand the RFS and look forward to working with them and 
my colleagues in laying out a path toward a renewable energy 
future.
    And I yield back, Mr. Chairman.
    Mr. Gosar. I thank the gentleman. I am glad that we also 
worked on potato potahto.
    I would like to recognize Mr. Jordan, the chairman of the 
Subcommittee on Health Care, Benefits, and Administrative Rules 
for his opening statement.
    Mr. Jordan. Thank you, Mr. Chairman. Let me thank you for 
having this hearing.
    You know, this would be laughable if it wasn't so serious. 
This is a classic example of what happens when you get a bunch 
of politicians together and think they are smarter than the 
marketplace. A bunch of politicians got together back in 2007 
and said you know what, we think we should blend it at this 
rate this year and then keep increasing it.
    And now all of a sudden we have hit the blend wall where 
even the EPA says--Mr. Grundler, who is here to testify today, 
testified even 3 years ago and said it is not feasible for the 
system to absorb that much ethanol, right? So instead of 
letting the hundreds of millions of consumers figure this out 
and the marketplace figure this out, politicians got together 
and they said we are smarter than everybody else, and we are 
going to put this schedule together. We think this is the way 
to go, and we are going to invest taxpayer money and skew the 
system in a way--this is a classic example of why you shouldn't 
do that, why you would let the marketplace work.
    And I look forward to hearing from our witnesses. I hope 
our witnesses will just say we never should have gone down this 
road in the first place, and the best thing we can do is get 
out of it as quickly as possible. And short of that, maybe 
there is some other remedy, but this is, again, just a great 
example of why you don't let a bunch of people in Washington 
who think they are smarter than everybody else start some 
program that winds up creating all kinds of problems.
    With that, I yield back.
    Mr. Gosar. I thank the gentleman.
    I now recognize Mrs. Lawrence, ranking member of the 
Subcommittee on Interior, for her opening statement.
    Mrs. Lawrence. Thank you, Chairman Gosar and Chairman 
Jordan, for holding this hearing today. I also want to thank 
our witnesses for your time and testimony today.
    A Republican Congress passed and a Republican President 
signed into law the Energy Policy Act, which established the 
Renewable Fuel Standard. The RFS seeks to decrease our nation's 
dependency on foreign oil, as well as to promote clean energy 
innovation and job creation. The need for RFS remains as true 
today as it was in 2005.
    I am proud to say that the innovation by Ford Motor Company 
headquartered in my home State of Michigan has sparked 
tremendous progress due to the RFS. For instance, since 2013, 
vehicles sold by Ford Motor Company in the U.S. are capable of 
running on gasoline as well as E15 blended ethanol fuel. To 
date, Ford has manufactured more than 6.4 million flexible fuel 
vehicles globally. Ford Motor Company's efforts demonstrate 
tremendous strides in advancing and promoting the use of 
renewable fuels, creating jobs and expanding our national 
economy.
    In addition, according to the biotechnology industry, the 
RFS has displaced nearly 1.9 billion barrels of foreign oil 
over the past decade by replacing petroleum fuel with homegrown 
biofuels.
    Although the RFS has experienced challenges, it is not the 
time to abandon the RFS. We owe it to our constituents, the 
future generations to keep the RFS on track as a means to 
reduce our carbon emissions and dependence on fossil fuels, and 
to create jobs building a cleaner energy future.
    I look forward to working with my colleagues to keeping 
this important piece of legislation intact.
    Thank you, and I yield back.
    Mr. Gosar. I thank the gentlewoman.
    I will also hold the record open for 5 legislative days for 
any members who would like to submit a written statement.
    We will now recognize our panel of witnesses. First, I am 
pleased to welcome Mr. Christopher Grundler, director of the 
Office of Transportation and Air Quality at the U.S. 
Environmental Protection Agency. Our second guest is Mr. John 
DeCicco, Ph.D., research professor at the University of 
Michigan Energy Institute. Did I say it right?
    [Nonverbal response.]
    Mr. Gosar. Ms. Kelly Stone, policy analyst at ActionAid 
USA; Mr. Wallace Tyner, Ph.D., the James and Lois Ackerman 
professor at the Department of Agricultural Economics at Purdue 
University; and our final witness is Mr. Nicolas Loris, the 
Herbert and Joyce Morgan fellow at the Heritage Foundation. 
Thank you all. Welcome to you all.
    Pursuant to committee rules, witnesses will be sworn before 
they testify. Will you please rise and raise your right hand?
    [Witnesses sworn.]
    Mr. Gosar. Let the record reflect that the witnesses 
answered in the affirmative.
    Thank you and please be seated.
    In order to allow for discussion, please limit your oral 
testimony to 5 minutes. Your entire written statement will be 
made part of the record.
    With that, I would like to recognize Mr. Grundler for 5 
minutes.

                       WITNESS STATEMENTS

               STATEMENT OF CHRISTOPHER GRUNDLER

    Mr. Grundler. Chairman Gosar, Ranking Member Lawrence, 
Chairman Jordan, Ranking Member Cartwright, and other members 
of the committee, I appreciate the opportunity today to testify 
on the Renewable Fuel Standard program and the EPA's recent 
final rule setting the annual volume standard for 2014, 2015, 
and 2016, as well as the biomass-based diesel volume 
requirement for 2017.
    As has been noted, the program began in 2006 under the 
Energy Policy Act of 2005 and modified by the Energy 
Independence and Security Act of 2007, or EISA, which 
established new annual volume targets for renewable fuel that 
increase every year to reach a total of 36 billion gallons by 
2022. It included 21 billion gallons of advanced biofuels. 
Congress also included waiver provisions for EPA to use to 
adjust these statutory targets in specified circumstances, 
including where the statutorily prescribed volumes could not be 
met.
    After an extensive notice and comment process, including 
working closely with our Federal partners at the U.S. 
Department of Agriculture and the U.S. Department of Energy, 
EPA finalized regulations to implement the EISA requirements, 
and those regulations went into effect in July 2010.
    The law requires EPA to issue annual standards for four 
different categories of renewable fuels, and the chairman 
already described these. We also established the applicable 
volume of biomass-based diesel, commonly referred to as 
biodiesel, that will be required in 2017. With this final 
action, we believe the RFS program is back on schedule and 
we're determined to keep it on schedule.
    Biofuel use over the past decade has increased 
significantly, especially for ethanol and biodiesel, and 
recently, we've seen important developments in the production 
of advanced renewable fuels, including cellulosic biofuel 
production. Most of this growth in EISA's renewable fuel 
targets for 2015 and beyond comes from these advanced 
cellulosic biofuels. We are committed to doing what we can to 
encourage and support production and blending of such fuels to 
maximize reductions in greenhouse gases.
    The final standards will increase the amount of biofuel in 
the market beyond historic levels, which is consistent with 
Congress's intent. The final standards provide for ambitious 
yet achievable growth and incentivize growth in advanced fuels 
that achieve substantial reductions in greenhouse gas emissions 
compared to the transportation fuels they replace. The rule 
uses the law's waiver authorities to adjust the annual volume 
targets but does so in a judicious way.
    The final rule addresses 3 years' worth of standards and 
sets the volume requirement for biomass-based diesel for a 
fourth year. For '14 and '15, we finalized standards at levels 
intended to reflect the actual amount of biofuel used 
domestically. For 2016 and for 2017 for biomass-based diesel, 
the standards we have finalized provide for increases over past 
levels. The final 2016 volumes for total and advanced renewable 
fuels reflect our consideration of two essential factors: 
first, that the market can respond to ambitious volume targets; 
and second, that today there are limits to the volumes that can 
be supplied to consumers.
    The final rule goes into considerable detail why some of 
the volume targets established in the statute cannot be 
reached. There are several reasons why, and some of them have 
already been mentioned: slower-than-expected development of the 
cellulosic biofuel industry and the resulting shortfall in 
cellulosic biofuel supply; a decline in gasoline consumption 
rather than the growth originally projected in 2007; and 
constraints in supplying certain biofuels to consumers, ethanol 
in greater than 10 percent of gasoline in particular.
    Our final rulemaking includes a discussion of this last 
constraint, known as the E10 blend wall. If gasoline demand is 
flat or trends downward, increasing the amount of ethanol used 
in the fuel pool will require a significantly greater use of 
fuels with higher ethanol content such as E15 and E85, which 
can be used in flexible fuel vehicles.
    However, EPA recognizes that there are real limitations in 
today's market to the increased use of these higher-ethanol-
content fuels, including current and near-term limits on 
fueling infrastructure. USDA is working to expand this ethanol 
fueling infrastructure.
    Overall, the final rule requires that total renewable 
standards grow by more than 1.8 billion gallons from 2014 to 
2016, which is an 11 percent increase over 2014. The final 
cellulosic standard is nearly 200 million gallons, or seven 
times more than the market produced in 2014, and for an 
advanced biofuel, the 2016 standard is nearly 1 billion gallons 
or 35 percent higher than the actual 2014.
    In addition, the biodiesel standard also grows steadily 
over the next several years, reaching 2 billion gallons by 
2017, a 23 percent higher level than the actual 2014 volumes. 
We believe that these volumes are achievable and consistent 
with Congress's clear intent to drive renewable fuel up even as 
we use the authorities that Congress provided EPA to manage the 
program responsibly.
    We've taken other steps to improve the administration of 
the RFS program. We've improved the petition review process for 
new pathways under the program, and they're already making a 
difference. Since launching this new process, we've approved 
over 50 petitions for more efficient corn ethanol plants with 
an average review time of less than 2 months. This is an 80 
percent improvement over our prior performance. We've also 
proposed new--six new pathways for second-generation--I'm 
sorry, finalized six new pathways for second-generation 
biofuels and proposed five more.
    Having finalized these standards as we look towards 2017, 
it's important to remember that the RFS program is only one 
part of the overall picture. Both USDA and DOE have programs 
supporting development of--and infrastructure, and we work 
closely with them in our work to implement this program.
    Thank you for the opportunity to appear before you today.
    [Prepared statement of Mr. Grundler follows:]
    
    
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
   
    Mr. Gosar. Thank you very much. And in the spirit of the 
NCAA tournament, -losic is 4, -losic is 0.
    [Laughter.]
    I would like to now introduce Mr. DeCicco from the 
University of Michigan.

                  STATEMENT OF JOHN M. DECICCO

    Mr. DeCicco. Thank you. I wish to thank the chairs, 
Representatives Gosar, ranking members Representatives Lawrence 
and Cartwright, as well as the other members of your 
subcommittees and the overall committee who are here today. My 
name is John DeCicco, and I'm a research professor at the 
University of Michigan's Energy Institute. My main focus is 
transportation fuel use and its environmental impact. I have a 
doctorate in engineering from Princeton University and I've 
worked on America's energy challenges for nearly 40 years, 
including 21 years at environmental organizations before 
returning to academia in 2009. My research has included 
scientifically rigorous evaluations of the RFS and other 
policies that promote biofuels such as ethanol and biodiesel.
    RFS proponents claim that the policy reduces CO2 emissions. 
I have found that it does not. In fact, from its inception, the 
RFS has increased rather than decreased CO2 emissions compared 
to petroleum fuels such as gasoline. My findings contradict the 
conventional wisdom about biofuels. They reveal errors in the 
computer modeling on which the environmental rationale for the 
RFS was based. It's no surprise that some biofuel researchers 
and advocates have criticized these findings and those of other 
scientists who also have found flaws in the modeling that backs 
the RFS.
    The claims that biofuels reduce CO2 emissions rely on a 
method known as lifecycle analysis. It's a way to compare fuels 
according to their carbon footprint. When it expanded the RFS 
through EISA in 2007, Congress required EPA to evaluate the 
lifecycle emissions of advanced biofuels. The Agency also 
adapted the method for its RFS impact assessments.
    EPA did not originate fuel lifecycle analysis. Rather, the 
method was largely developed at the Department of Energy and by 
academic proponents of renewable energy, and its use was 
advocated by the green groups who backed the RFS. 
Unfortunately, lifecycle analysis makes a mistake by assuming 
that biofuels are automatically carbon neutral. Only under 
certain conditions does replacing a fossil fuel with a biofuel 
neutralize the CO2 that leaves tailpipes. For that to occur, 
harvesting the corn or other feedstock must greatly speed up 
how quickly cropland pulls CO2 from the air. That doesn't 
happen for the corn and soybean harvests diverted to produce 
renewable fuels as mandated by the RFS.
    My analysis looks directly at farm data, and those data 
show that in practice the carbon neutrality assumption is not 
met. My research team evaluated corn ethanol for which a 
lifecycle analysis study claims a 40 percent reduction in 
greenhouse gas emissions compared to gasoline. We found no 
significant reduction of emissions. Moreover, under typical 
crop rotations, net emissions could be as much as 70 percent 
higher than those of gasoline. These results do not even 
include indirect land-use change, which would increase biofuels 
emissions' impact even more.
    So here we are 10 years after the 2005 energy bill first 
established the RFS, 8 years after it was expanded by EISA, and 
the policy has worsened CO2 emissions. It turns out that the 
studies used to justify it are flawed. Environmentally 
speaking, it would be best to repeal the Renewable Fuel 
Standard. Short of that, helpful reforms would include scaling 
the mandate back to well below the blend wall and striking 
lifecycle analysis from the policy.
    Thank you for letting me share my findings, and I'll look 
forward to your questions.
    [Prepared statement of Mr. DeCicco follows:]
    
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
   
    
       
    Mr. Gosar. I thank the gentleman.
    I now recognize the gentlewoman, Ms. Stone, for her 5 
minutes.

                    STATEMENT OF KELLY STONE

    Ms. Stone. Thank you, Chairman Gosar, Chairman Jordan, 
Ranking Members Lawrence and Cartwright, and members of the 
committee. Thank you for inviting me to testify on the 
Renewable Fuel Standard. I greatly appreciate the opportunity 
to share ActionAid USA's perspective on the RFS and the need 
for reform.
    ActionAid is an international organization committed to 
countering extreme poverty and social injustice. We make long-
term commitments to empower the communities that we work with 
helping them to identify and address the challenges they face 
in realizing their human rights and overcoming extreme poverty.
    ActionAid USA advocates for reform of the RFS because of 
its impact on food security, land tenure, and water. Mandates 
for food-based biofuels such as the RFS increase hunger around 
the world, drive land grabs in developing countries, and divert 
resources such as water to fuel.
    First, on food, I want to emphasize to the subcommittee how 
fundamentally important food security is. Hunger impacts every 
aspect of development, from health to education and the 
workforce. Without food security, real development is not 
possible.
    One of the primary ways biofuel mandates impact hunger is 
by increasing food prices. Of course, many factors go into 
determining the price of food. However, it is widely recognized 
that food-based biofuels create an upward pressure on food 
prices. And while prices have dropped from 2012, they are still 
high compared to historical levels and present real challenges 
to poor families.
    Mandates for food-based biofuels impact prices by driving 
up demand for a particular feedstock. This increase in demand 
impacts the price not only of that feedstock but any food that 
requires that feedstock for production or feedstocks that can 
be a substitute. For example, significantly increased demand 
for corn creates upward pressure on food prices for corn, dairy 
because cows eat corn as feed, and for other grain like wheat. 
If people find corn prices have gone up, they may try to 
substitute for corn with wheat, but that means demand and 
prices for wheat have gone up as well.
    Access to safe and nutritious food often comes down to the 
ability to pay, so food price is a critical part of food 
security. Poor families in developing countries often spend a 
significant amount of their income on food, sometimes as much 
as 80 percent. What looks like a small increase to us can be 
devastating to poor people trying to feed their families.
    On land, demand for biofuels also drives up demand for land 
on which to produce those biofuels. This results in small 
family farmers being forced off their land in developing 
countries to make way for large biofuel plantations. Instead of 
producing food for the local community, that land is used to 
produce fuel for a developed country. ActionAid has worked with 
communities in Central America, Africa, and Asia who've had 
their land threatened or taken in this way.
    I want to emphasize what a loss of land means to these 
farmers. This is not simply a loss of property for which they 
can be easily compensated. For small-holder farmers, secure 
land tenure is crucial to their ability to feed themselves, 
their families, and their communities. Land is their 
livelihood, their investment in the future, and in some cases, 
a part of their cultural identity. That security is not easily 
replaced.
    Last May, I met with some family farmers in Mato Grosso, 
Brazil. They were struggling to grow food because of the 
biofuel production next door, including the aerially sprayed 
chemicals involved in a production were hurting their crops. 
One man's voice in particular stays with me because he did not 
just talk about the loss of food but a loss of identity. He had 
been a farmer his whole life but now he cannot grow food for 
his family. It was as if he felt that his identity had been 
taken from him, as well as his crops.
    Finally, water, like land, is a finite resource. There is 
only so much available to a community at any given time for 
growing and preparing food, drinking, and hygiene needs. Water, 
as you know, is profoundly important for human survival, as 
well as development. ActionAid USA's research has found that in 
most cases expanding biofuel production in countries that the 
U.S. imports these fuels from results in an increase in water 
consumption. Even when biofuel crops are rain-fed, that 
resource is being used to produce fuel for export instead of 
being used to meet the community's fundamental needs.
    The RFS is a broken policy that is badly in need of reform. 
Many in Congress supported the RFS in 2005 and again in 2007 
with the best of intentions. However, the evidence is now clear 
that this is a policy that is not helping the environment and 
it is doing real harm to people. We need a fundamental shift in 
our approach to biofuels, and we must end mandates for food-
based biofuels such as corn ethanol.
    Thank you.
    [Prepared statement of Ms. Stone follows:]
    
    
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    Mr. Gosar. I thank the gentlelady.
    I now recognize Dr. Tyner for his 5 minutes.

                 STATEMENT OF WALLACE E. TYNER

    Mr. Tyner. Thank you for the opportunity to be here today 
and to share my observations on the Renewable Fuel Standard and 
its possible impacts.
    In general, biofuel policies have--in the RFS have had 
three major objectives. One is to enhance rural incomes, two is 
to reduce oil imports, three is to reduce greenhouse gas 
emissions. My assessment is that the RFS has been successful in 
achieving all three of these objectives. And as was indicated 
earlier, the final numbers for the 2014-2016 RFS were released 
by EPA in November of 2015. Let me review briefly what they 
said in each of the three major categories.
    For cellulosic biofuels, basically the decision that EPA 
made is that they cannot mandate something be blended which 
doesn't exist. So they've taken a ``build it and we will come'' 
attitude. That is, they estimate the amount of cellulosic 
biofuel that will be available in the following year, and that 
becomes the RFS level.
    For biodiesel, EPA believes the system can absorb much more 
than the original RFS level, so they set the 2016 level at 1.9 
billion gallons, almost twice the original RFS level.
    For corn ethanol, EPA took into account the blend wall but 
also the fact that the original congressional intent of the RFS 
was to pull into the market more biofuels than would have come 
into the market by market forces alone. My sense is that they 
made a reasonable compromise between conflicting issues and 
objectives.
    Next, I want to comment on greenhouse gas emission 
estimations. When biofuels are produced and consumed, 
greenhouse gases are released, and these must be measured and 
compared with fossil fuel emissions to determine the extent of 
emission reductions for each biofuel pathway. Agencies use some 
combination of attributional and consequential lifecycle 
analysis to estimate these emissions.
    Economic models are used to estimate the market-mediated 
responses to the higher demand for the agricultural 
commodities. Possible responses include--to the higher 
commodity prices include reduced consumption, crop-switching 
from one crop to another, converting forest or pasture to 
cropland, more intensive use of cropland, and changes in 
international trade and production.
    Consequential lifecycle analysis is driven by market 
forces. Some have argued for an approach called additional 
carbon. The basic argument is crops grown for biofuels would 
have been grown anyway so there is no additional carbon 
sequestered in producing the biofuel crops. Any crop used for 
biofuels just reduces use elsewhere in the economy.
    The empirical evidence in my view does not support this 
argument. For example, harvested corn area of the United States 
has increased to roughly 10 million acres over the last two 
decades. Global harvested area of grains, cotton, and oilseeds 
has increased over 200 million acres between 2003 and 2012. In 
other words, there has been additional carbon taken from the 
atmosphere in producing these additional crops.
    The U.S. Environmental Protection Agency, the California 
Air Resources Board, and the European Union all use some 
combination of attributional and consequential lifecycle 
analysis to measure the greenhouse gas reductions of biofuels. 
None accept the additional carbon argument.
    Next, I want to comment on biofuel impacts on developing 
countries. The reasons for commodity price increases in 2008 
and again in 2011 have been extensively researched. Most 
studies have concluded that biofuels did play a role but not a 
predominant role in the price increases. To the extent that 
biofuels played a role in commodity price increases, it's clear 
that urban consumers in developing countries are adversely 
affected.
    But there's another side to the story, and that is that 
rural areas and farmers in developing countries can be made 
better off by those higher prices. The World Bank says 70 
percent of the world's poor live in rural areas in developing 
countries and derive their primary livelihood from agriculture. 
To the extent that these higher prices are transmitted to rural 
areas, farmers and other rural residents can be made better off 
as their incomes increase.
    Last, some comments on the road to the future. The 
scientific community has concluded that climate change is real 
and is caused by human intervention. Most economists believe 
that the most efficient way to deal with the adverse impacts of 
climate change is through pricing emissions, through a market 
mechanism with a carbon tax. But Washington so far prefers a 
regulatory approach, so we have CAFE standards for fuel 
economy, the Clean Power Plan for electricity, and the 
Renewable Fuel Standard for reducing automotive emissions. 
Absent a market-based approach, I think the Renewable Fuel 
Standard and the other regulations are an appropriate and 
effective means to move our economy towards lower greenhouse 
gas emissions.
    [Prepared statement of Mr. Tyner follows:]
    
    
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    Mr. Gosar. I thank the gentleman.
    And now our last witness, Mr. Loris, you are recognized for 
5 minutes.

                 STATEMENT OF NICOLAS D. LORIS

    Mr. Loris. Thank you. Chairman Gosar, Chairman Jordan, 
Ranking Member Lawrence, Ranking Member Cartwright, and 
distinguished members of the subcommittees, thank you for this 
opportunity to discuss the Renewable Fuel Standard. The views I 
express in this testimony are my own and should not be 
construed as representing any official position of the Heritage 
Foundation.
    Austrian economist Friedrich Hayek famously wrote that 
``The curious task of economics is to demonstrate to men how 
little they know about what they imagine they can design.'' 
Truer words could not be spoken about the Renewable Fuel 
Standard. The policy reveals the inability of the Federal 
Government to centrally plan energy markets and the unintended 
consequences it creates when doing so. The quota concentrates 
benefits to a select few and disperses the costs amongst the 
rest of us.
    Even within the agricultural community, the RFS rewards 
special interests connected to the policy and adversely impacts 
much of rural America. No matter how brilliant or well-
informed, politicians cannot predict the future of energy 
markets, and even though the EPA can adjust the biofuel 
targets, the blend wall concerns, and Congress grossly over 
predicting the commercial viability of cellulosic ethanol 
demonstrates why the government shouldn't set production quotas 
in the first place.
    And the RFS is far from the only mechanism the government 
has used to prop up the biofuels market. We've spent billions 
on targeted tax credits, imposed tariffs on imported ethanol, 
provided loan guarantees to cellulosic ethanol plants, and 
continue to spend taxpayer dollars on biofuel infrastructure in 
attempting to commercialize advanced biofuels.
    The RFS and these complementarity subsidies have not 
contributed to meaningful reductions in oil supply or oil 
consumption. However, the mandate's cost to Americans is a 
substantial, as we pay tens of billions of dollars more in 
higher food and gas prices each year. These higher prices hurt 
low-income families both here and abroad the most. These are 
the citizens that spend a disproportionately higher percentage 
of their budget on these goods.
    The mandate distorts commodity production and prices and 
takes land away from competing crops. About 40 percent of 
America's corn crop goes to ethanol for fuel. In 2012 the 
amount of corn used to produce ethanol in the U.S. exceeded the 
consumption of the entire continent of Africa and every single 
country with the exception of China.
    Biodiesel generated from soybeans presents the same food-
for-fuel problem. In 2004, the year before Congress first 
created RFS, less than 1 percent of the soybean crop was used 
for biodiesel. By 2014 that figure jumped to 23 percent. 
Consequently, the diversion of crops to fuel raises the input 
prices for livestock producers. In total, the Congressional 
Budget Office estimates that Americans spend $3.5 billion more 
per year at the grocery store because of this mandate. Research 
from several universities finds the cost to be significantly 
higher. Whatever the most accurate estimate is, the direction 
is always the same: We pay more.
    The RFS drives up prices at the pump as well. Americans are 
paying $10 billion more annually to blend ethanol into our 
gasoline. According to DOE and EPA's own website, a motorist 
could spend an additional $450 per year to run a flex fuel 
vehicle on E85 compared to a regular gasoline blended with E10.
    And the RFS has unintended environmental impacts. Even the 
EPA acknowledges that increases in soybean production as a 
result of the mandate can cause adverse effects to water 
quality, ecosystems, and habitat while increasing criterion 
pollutants like sulfur dioxide and nitrous oxide.
    Furthermore, the alleged climate benefit from the RFS is 
dubious at best. Even under the assumption that switching from 
oil to biofuels significantly reduces greenhouse gas emissions, 
which is a very generous assumption, the impact on global 
temperatures would be negligible.
    But the real problem with RFS is not the use of biofuels 
themselves. Rather, it is Washington deciding what goes in our 
gas tanks. Ethanol would likely exist in a world without the 
mandate, though clearly not in as great of quantity. But that 
should be for the market to determine.
    Collectively, Americans spent hundreds of billions of 
dollars on gasoline each year. Globally, the transportation 
fuels market is a multi-trillion dollar opportunity. Any 
alternative energy source won't need a government program 
mandating its production and consumption. The profit incentive 
rewards cost-competitive fuels.
    Broadly speaking, the RFS provides valuable lessons about 
the problems when the Federal Government intervenes in energy 
markets. Bad policies that award preferential treatment remain 
in place or expanded because of the supposed political 
importance trumps economic viability. Even former Vice 
President Al Gore admitted that he supported the corn ethanol 
mandate because he had a strong incentive to please his 
constituents in Tennessee and the farmers in Iowa. It was only 
until after he stopped running for office that he could call 
first-generation biofuels a mistake.
    The RFS, and all other energy subsidies for that matter, 
create a vicious loop of politicians, lobbyists, and special 
interests protecting these policies and determining who 
produces what. The most effective solution to this problem is 
to eliminate the preferential treatment altogether.
    In conclusion, Congress should recognize the entire mandate 
is a failure and the government has no legitimate role in 
propping up one energy source over another. The only viable 
reform is to repeal RFS in its entirety, and Congress should do 
so as part of fundamental reform that eliminates subsidies for 
all energy sources. Such reforms will empower the private 
sector and innovative companies to drive fuel competition and 
choice.
    Thank you, and I look forward to your questions.
    [Prepared statement of Mr. Loris follows:]
    
    
    
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    Mr. Gosar. I thank the gentleman.
    The chair notes the presence today of our fellow OGR member 
Mr. Welch. We appreciate your interest in this topic and 
welcome your full participation in the hearing.
    Without objection, so ordered.
    I would like to first recognize the gentleman from 
Colorado, Mr. Buck, for his questions.
    Mr. Buck. Thank you, Mr. Chairman.
    Mr. Grundler, I have three different ethanol producers in 
my district. One of them tells me that the RFS is a ceiling, 
and the other one tells me the RFS is a floor. And I have 
received so much conflicting information on this. I have a few, 
I think, fairly straightforward questions for you.
    When does the RFS expire? You mentioned 2022. Is that the 
date that people agree on that the RFS expires?
    Mr. Grundler. The RFS does not expire.
    Mr. Buck. Okay. Well, when you mentioned 2022, what happens 
in 2022?
    Mr. Grundler. In 2022, the statutory mandates, the 
specified volumes that Congress put in the law and EPA is 
required to, after 2022, establish what the appropriate volumes 
should be.
    Mr. Buck. When does the market kick in? When does the 
consumer get the chance to say I want E85, I want E10, I want 
to E0?
    Mr. Grundler. The consumer has that choice today, sir.
    Mr. Buck. We don't have to have E10 in our car?
    Mr. Grundler. I'm sorry, the consumer has a choice of using 
all of those fuels with respect to E10. The refining industry 
and the transportation fuels of this industry have been using 
ethanol as an octane enhancer, as a volume extender for many, 
many years.
    Mr. Buck. So many of us believe the RFS is a failure 
because we have standards that are arbitrarily set and somehow 
the marketplace is supposed to react. Why is EPA in any better 
position in 2022 to do something that Congress failed to do 
properly up until 2022?
    Mr. Grundler. Well, the Congress did give the administrator 
a long list of factors to consider for what those future 
standards or volumes should be comprised of, including 
environmental impacts, the impacts on energy security, impacts 
on cost to consumers, the impacts on agriculture, the impacts 
on transportation ----
    Mr. Buck. Let me ask you this. There are blender pumps 
going in all across America right now, and blender pumps give 
individual consumers the ability to make choices between 
whatever level--actually, whatever level the law allows but 
hopefully someday whatever level they choose. Isn't that a 
better way to determine ethanol consumption in this country 
than to have either Congress or the EPA make that decision for 
consumers?
    Mr. Grundler. Well, sir, you know, our job that you 
directed us to do is to implement this law as ----
    Mr. Buck. I actually asked you for an opinion and not what 
the law was this time. Wouldn't that be a better way, given our 
marketplace in America, to allow consumers to make those 
choices?
    Mr. Grundler. Sir, I'm not here to provide an opinion or 
advice on how to change the law. I'm representing the Agency, 
and we do not have a position on that.
    Mr. Buck. Under the system as it is currently set up, does 
a refiner pay an ethanol producer if the refiner doesn't use a 
certain amount of ethanol each year?
    Mr. Grundler. No, the refiner buys--the refiner actually 
has a choice to either buy the ethanol, and along with that 
comes a credit, which is used to measure compliance, or the 
refiner can go to the marketplace and buy a credit. It's called 
a renewable--a RIN to ----
    Mr. Buck. Who gets the money from that RIN?
    Mr. Grundler. Who gets the money from that RIN? Whoever the 
refiner is buying it. He could be buying it from another 
refiner, it could be--they're--it's a marketplace. These are 
private transactions.
    Mr. Buck. Ms. Stone, I have a question for you. Just sort 
of summarize your testimony. You indicated that the ethanol 
production raises food prices. And I understand that there are 
other factors. There's water use and chemical use and other 
things, but is that a fair summary?
    Ms. Stone. Yes, that ----
    Mr. Buck. Okay.
    Ms. Stone. Yes.
    Mr. Buck. And that demand for ethanol drives up food 
prices?
    Ms. Stone. Yes.
    Mr. Buck. Is there any other demand out there that you 
would like to manipulate to drive down prices? And I paid a lot 
for my iPhone. I am just wondering if you could help me. Could 
we drive down demand for iPhones? And my car was really 
expensive also. Are there things that we could do to reduce the 
price of other things and perhaps not just blame farmers who 
are making more money as a result of ethanol being used, but we 
could blame high-tech companies, we could blame all kinds of 
producers in this country for the cost and the benefit that 
they receive.
    Ms. Stone. I appreciate the Congressman's question because 
I do want to be very clear that I in no way hold American 
farmers responsible for the impacts of the RFS. They are quite 
rightfully responding to a market that Congress has created.
    But what I am saying is that this energy policy is having 
detrimental impacts on the most vulnerable and poorest in the 
world and that I--and that it's also not achieving the goals 
that Congress set out for it initially. And so that is time to 
move away from food-based biofuels.
    Mr. Buck. I thank the chairman. I yield back.
    Mr. Gosar. I thank the gentleman, and I now recognize the 
gentlewoman from Michigan, Mrs. Lawrence.
    Mrs. Lawrence. Thank you, Mr. Chair.
    Supporters of the RFS point to its success. For instance, 
according to the biotechnology industry that RFS displaced 
nearly 1.9 billion barrels of fuel. Mr.--is it Grunder?
    Mr. Grundler. Grundler.
    Mrs. Lawrence. Grundler. I understand that the EPA 
recognizes that currently, market limitations are limitations 
to the increased use of higher-ethanol-content fuels, including 
current market, its near-terms limits on fueling 
infrastructure. What assurances can you provide to this 
committee that the new rules, as well as the future rules, will 
not cripple the RFS program's ability to encourage 
infrastructure investments?
    Mr. Grundler. Thank you, ma'am. The final stats we put in 
place by no means cripple this industry or its future. I'm not 
in a position to speculate what 2017 or 2018 or 2019 standards 
will be. That will be up to the administrator. We're doing the 
analysis right now for the 2017 volumes. But the trends are 
going up. We foresee steady growth in these fuels as 
competition increases and as more facilities come online to 
produce these advanced fuels.
    Mrs. Lawrence. Ms. Stone, you urge the committee to support 
reforming RFS, is that correct?
    Ms. Stone. That's correct.
    Mrs. Lawrence. So give us some suggestions. What would you 
like to offer to reform it?
    Ms. Stone. So what ActionAid USA would like to see moving 
forward with the RFS is an end to food-based biofuel mandates 
because of the reasons I outlined in my statement. They aren't 
working for the environment, but they are harming people.
    We would also like to see sustainability measures in place, 
both social and environmental, to ensure that land use, it does 
not compete with food production globally.
    Mrs. Lawrence. Okay.
    Ms. Stone. And that's also part of the reason that we have 
supported removing, at least at first, the corn ethanol mandate 
as a good first step.
    Mrs. Lawrence. Thank you.
    Dr. Tyner, in your prepared statement, you stated that the 
RFS has achieved its stated objectives. Do you believe that the 
RFS rules announced in 2015 will help to restore confidence 
within the biotechnology industry to make sure new 
infrastructure investments in the renewable fuel industry?
    Mr. Tyner. Frankly, yes, I--in general, I think that's 
correct. We have to recognize that the corn ethanol industry is 
a mature industry. It's already reached the capacity to produce 
RFS level. It's not going to grow beyond where it is very much 
at least. The framework that EPA is using for cellulosic 
biofuels, basically ``build it and we will come,'' does create 
the incentive structure for new companies to enter and come 
into the business. And the same is true with biodiesel.
    Mrs. Lawrence. My last question to Dr. Grundler, right, I 
understand that both the U.S. Departments of Agriculture and 
Energy have programs supporting biofuels and biofuels 
infrastructure and that you work closely with these agencies to 
implement these statutes. Can you elaborate on what specific 
programs you collaborated with with the Department of 
Agriculture and Energy to support the biofuels and the biofuel 
infrastructure?
    Mr. Grundler. Yes. The primary cooperation is in setting 
these annual fuel volumes. We rely on expert advice with 
respect to future gasoline demand and what the potential is for 
the market to respond to different scenarios of volumes.
    We also work very closely with experts across these two 
agencies with respect to new biofuel pathways, what are the 
right assumptions we should be making about ag inputs into our 
modeling and so on, so it's a very close relationship. The 
Energy Department also sponsors quite a bit of research into 
advanced second-generation biofuels.
    Mrs. Lawrence. Thank you. I yield back.
    Mr. Gosar. I thank the gentlewoman and now recognize the 
gentleman from Ohio, Mr. Jordan.
    Mr. Jordan. Thank you, Mr. Chairman.
    Okay, Mr. Lawrence, tell me what part of the story I got 
wrong. A few years ago, politicians get together and they 
decide they are going to determine what levels of ethanol 
should be put into the market and should be mandated usage by 
the American consumer. They do this for a number of energy 
sources. We have the Department of Energy Loan Guarantee 
Program where they gave all kinds of money, billions of dollars 
to 28 different companies. Twenty-two had a credit rating of BB 
minus. A bunch of them went bankrupt, companies like Beacon 
Power and Solyndra.
    This year in the ethanol program, the mandated schedule 
that all these smart politicians decided on a few years ago, 
that they were smarter than the market, is now going to hit the 
blend wall, which means it can't really work. That is not your 
conclusion or even Dr. DeCicco's conclusion. That is the EPA's 
conclusion, as evidenced by the testimony Mr. Grundler gave 
just a few years ago.
    Now, the EPA can change, they can waive the level. They 
have to set--actually, there is a notice time, right? They have 
to notice each year what level it is going to be. And in the 8 
years this law has been in place, they have only had that 
date--they have only complied with the law three times out of 8 
years, right? So even though they can change--they couldn't 
figure it out. They could even tell us at the appropriate time 
schedule what the law lays out.
    And this year, when they did tell us what level they were 
going to use, they said, well, we are also going to tell you 
what level we were going to use in 2013 and 2014. So they went 
back retroactively. It is hard to tell you what you are going 
to use when you have already used it, right? You can't change 
the past, but that is what they did in November of 2015.
    And then to add insult to injury, as Dr. DeCicco pointed 
out, all this actually increases greenhouse gases. Now, I mean, 
this would be like a comedy, right? You couldn't make a movie--
sometimes fact is actually stranger than fiction. And the 
clincher is this, because Mr. Grundler in answering Mr. Buck's 
question, in 2022 EPA is completely in control, right? Only 
three times in 8 years could they actually tell us what the 
level is. Now, the level is going to be too much for the market 
to even--it won't work. But now in 2022 they are completely in 
charge. Now, what part of that story do I have wrong?
    Mr. Loris. None of it. In fact, after your opening 
statement I was just going to say ditto and forgo my opening 
remarks because you're spot on. And again, this speaks to the 
government trying to force technologies into the market. Even 
when gas prices were high, were $4 a gallon, these fuels 
couldn't compete with oil. When gas prices are consistently 
high in Europe, you don't see biofuels overtaking those 
markets.
    So as much as the Federal Government wants to try and force 
alternative technologies into the market, they're just not 
cost-competitive, and it's cost us as taxpayers, as energy 
consumers, and with this policy, as food consumers.
    Mr. Jordan. Yes, so what is going to happen in 2022 when 
the EPA is totally running the show? They can decide the 
number? They can decide when they are going to tell us? What is 
going to happen?
    Mr. Loris. That is a great question, and ostensibly, 
whoever is in control of the administration at that point is 
going to continue to tell the EPA to ramp up those targets, 
which makes the opportunities to repeal the failed program now 
all that much more important.
    Mr. Jordan. Dr. DeCicco, do you want to add anything?
    Mr. DeCicco. I very much agree. Clearly, Dr. Tyner and 
myself have a difference of perspective on the success of this 
policy. You know, I wouldn't call it a comedy as much as I'd 
call it a tragedy.
    You know, I think in many ways there were some good 
intentions. I mean, after all, when EISA was passed--I don't 
remember the vote in this chamber, but it went through the 
Senate 86 to 8. A lot of people felt that that policy was going 
to be beneficial for a variety of reasons.
    But this particular part of the policy, you know, as Dr. 
Tyner said, there's kind of a three-legged stool here, rural 
economic interests--or I would be more specific--certain rural 
economic interests, I think, is as well-known. Not everybody in 
the agricultural sector is at all pleased with this policy. 
Certain parts of the sector do benefit from it, clearly, 
though. So you have a partial leg of that first leg on certain 
parts of the agricultural community.
    I think in energy security the cost of this policy, 
enormous costs, both monetary and environmental, make it an 
extremely cost-effective way. Sure, it's displaced some oil, 
but just in the last 2 years the expansion we've had, the 
market-driven expansion in domestic oil production due to 
technology advances that the oil and gas industry itself put 
into place have put in more than three times the volume of fuel 
into the market than was forced and over the last 10 years by 
the RFS. So sure, it has displaced some oil, but the market has 
done a much better job of supplying our energy needs.
    When it comes to the environment, something like greenhouse 
gas emissions, that's an externality. Government intervention 
is required. The market is not going to fix that problem on its 
own. But that intervention needs to be very judicious. Much 
more thought needs to be given about how to address the part of 
emissions associated with petroleum fuel use.
    As I said, the types of analyses on which, as Dr. Tyner 
points out, everyone has relied, I don't disagree that all the 
agencies here and abroad have been using lifecycle analysis for 
this. My academic work shows that that method is inherently 
flawed, and I think we need to go back to the drawing board on 
that score because the--not--one of the things I want to take 
issue with, you know, Wally said that this measure--this 
analysis is used to measure. It doesn't measure. It models. 
These are computer simulations, computer scenarios. They're not 
like taking a gallon of fuel, you can measure how much sulfur 
or lead are in that fuel for chemical analysis. That's not 
what's going on here. It's not measurement. It's computer 
modeling. And unfortunately, in spite of good intentions, the 
models are just plain wrong.
    Mr. Jordan. Thank you.
    Mr. Gosar. I thank the gentleman.
    I now acknowledge our colleague, Mr. Cartwright, from 
Pennsylvania. By the way, the current score is 5-0 law over 
low.
    Mr. Cartwright. Cellulosic is the correct pronunciation.
    Mr. Gosar. So we have got zero.
    [Laughter.]
    Mr. Cartwright. Well, thank you, Mr. Chairman. And you know 
what, Dr. DeCicco, I want to open up with you. I said in my 
opening statement, and I kind of parroted something that I got 
from the biotechnology innovation organization, and that was 
this: Over its 10-year lifespan, the Renewable Fuel Standard 
has reduced U.S. transportation-related carbon emissions by 
589.33 million metric tons, and that really just begs the 
question that you are raising because I see that that was done 
using a GREET 1 2013 model, which is a form of lifecycle 
analysis that you are criticizing. Have I stated that 
correctly?
    Mr. DeCicco. That's correct.
    Mr. Cartwright. Okay. And you have also gone so far as to 
say just now that the lifecycle analysis is the one generally 
employed by the Department of Energy, by the EPA, et cetera, 
correct?
    Mr. DeCicco. That's right.
    Mr. Cartwright. That is sort of the conventional wisdom?
    Mr. DeCicco. It is.
    Mr. Cartwright. And you are bucking that ----
    Mr. DeCicco. Yes.
    Mr. Cartwright.--and you are doing that based on your own 
research over how many years?
    Mr. DeCicco. Well, you know, true confession here, over --
--
    Mr. Cartwright. We are looking for the truth generally.
    Mr. DeCicco. Right. That's right. Over 20 years ago at an 
earlier stage of my looking at transportation energy use and 
emissions, I wrote the first paper coauthored with a professor 
at Dartmouth that called for the use of lifecycle analysis to 
assess the emissions from transportation fuels, including 
biofuels. We were taken with the technique at the time. It was 
developed in the late '80s.
    Mr. Cartwright. So it is not completely crazy.
    Mr. DeCicco. So it's--it seemed to make sense at a certain 
level, and I went along with that. About 10 years ago, actually 
before EISA was passed ----
    Mr. Cartwright. Dr. DeCicco ----
    Mr. DeCicco.--I began questioning that ----
    Mr. Cartwright.--unfortunately, I only have 5 minutes ----
    Mr. DeCicco. Okay.
    Mr. Cartwright.--so we can't make short stories long around 
here.
    Mr. DeCicco. Okay. Well, the basic point is I've been 
thinking and analyzing these issues very deeply for 25 years.
    Mr. Cartwright. And please forgive me for asking this 
question, but it is something that we do around here. May I ask 
who has been funding your research?
    Mr. DeCicco. Sure. I do have currently a 1-year grant from 
the American Petroleum Institute on this. They're not the only 
funder. The work--the core work ----
    Mr. Cartwright. And let me interrupt you for a moment 
there.
    Mr. DeCicco. Sure.
    Mr. Cartwright. Is it a matter of complete indifference to 
you whether the American Petroleum Institute continues to fund 
your research into the future?
    Mr. DeCicco. Yes, it is.
    Mr. Cartwright. Okay.
    Mr. DeCicco. And my position on this issue, in fact, my, 
you know, position against the RFS predates by a good number of 
years funding from the American Petroleum Institute.
    Mr. Cartwright. Thank you, sir.
    Now, Mr. Grundler, on behalf of the EPA, can you address 
from an environmental perspective why EPA encourages the 
production and use of ethanol in biomass-based diesel by 
including them in the RFS?
    Mr. Grundler. Thank you, sir. Our job is to administer the 
statute that Congress has written. And it is the Congress who 
has established the goals in the law and set these very 
ambitious levels of advanced and total renewable fuel. Congress 
did not establish an ethanol standard. Congress established a 
total and an advanced standard and a cellulosic standard and a 
biomass-based diesel standard.
    I'd also just like to point out that Congress also directed 
EPA to utilize lifecycle analysis to understand land-use 
impacts both direct and indirect from the increased use of 
biofuels.
    Mr. Cartwright. Very good. Thank you for that, Mr. 
Grundler.
    And, Dr. Tyner, I wanted to give you a chance to weigh in 
on this. Using the GREET 1 2013 lifecycle analysis, in your 
view, is that appropriate?
    Mr. Tyner. GREET is a model that it--it's called an 
attributional analysis. It measures the direct emissions. It 
does not take into account the land-use change emissions. So it 
is the state-of-the-art for measuring direct emissions.
    Mr. Cartwright. Well, I thank you for that. And again, 
thank you to all of our witnesses for appearing today.
    And I yield back, Mr. Chairman.
    Mr. Gosar. I thank the gentleman. We are still 5-0.
    I would like to acknowledge my colleague from Oklahoma, Mr. 
Russell.
    Mr. Russell. Thank you, Mr. Chairman, and thank you to all 
of the witnesses here today. My questions would be directed 
initially to Dr. Tyner.
    We have heard today that 1.9 billion barrels of equivalent 
fuel has been produced over the last 10 years with these 
biofuels, cellulosic or -losic, whatever it might be. When we 
look at the annual consumption of fuel and barrel production, 
we consume about 7 billion barrels a year. So in other words, 
1.9 billion, while that sounds like an extraordinarily large 
number, is actually 13 weeks over a decade. So that will be 
kind of the frame up after a decade we have produced 13 weeks 
of fuel.
    My question, sir, is can you make plastic out of corn?
    Mr. Tyner. I'm not a plastic corn scientist, but I have 
read that it can be done, yes.
    Mr. Russell. Okay. Can you make asphalt out of corn?
    Mr. Tyner. I do not know.
    Mr. Russell. Can you make rubber out of corn?
    Mr. Tyner. I do not know.
    Mr. Russell. Can you make frames for computer chips out of 
corn?
    Mr. Tyner. I do not know.
    Mr. Russell. Okay. How much ethanol-based fuel is used for 
jet fuel?
    Mr. Tyner. None.
    Mr. Russell. Oh, I see. Did you know that there is 25 
percent less BTUs in ethanol as opposed to petroleum-based 
fuel?
    Mr. Tyner. It's actually 33, sir.
    Mr. Russell. Okay. I will take your word on that. But do 
you also acknowledge that there is a higher smog effect also on 
the production of ethanol?
    Mr. Tyner. My understanding of the analyses that have been 
done on that is that it depends on the study that was done and 
time of year it was done, so it's still uncertain, I think.
    Mr. Russell. Well, it wasn't uncertain in the 1995 Third 
Circuit Court of Appeals in the ATI v. the EPA. It might be 
worth noting that.
    Did you know that it takes 50 acres of corn for a gallon of 
ethanol to be produced?
    Mr. Tyner. That's not true.
    Mr. Russell. It is not true? Oh, I see. Or 75 gallons of 
water per gallon of ethanol?
    Mr. Tyner. I don't know the water metric.
    Mr. Russell. So I guess, you know, for all of that and all 
of our lifestyle that we enjoy as Americans and, you know, the 
not taking into account the farm implements, the labor, the 
water, the use of food supply, the impact on our defense, the 
fact that we wouldn't have water bottles, cell phones, 
computers, computer chips, synthetic clothing, roads. I mean I 
could go on. We could look around this room and identify 
practically everything that has some basis to our quality of 
life. Are you still of the firm belief that we need to 
eliminate petroleum with biofuel?
    Mr. Tyner. I never said that we should eliminate petroleum 
with biofuel, and in fact, it's impossible to eliminate 
petroleum with biofuel.
    Mr. Russell. So now it gets back to one of efficiency and 
what is best for the environment. Do you think consuming the 
world's food supply and putting it in a gas tank is good for 
human beings?
    Mr. Tyner. I think that we have an obligation to our 
children and our grandchildren to reduce greenhouse gases. We 
have a few ----
    Mr. Russell. I have an obligation to feed them as well.
    Mr. Tyner. And we're doing a good job of it.
    Mr. Russell. Yes.
    Mr. Tyner. The United States has the most productive 
agricultural system in the world. American consumers eat for 
less than 10 percent of their disposable income, the lowest in 
the world. We're doing a very effective job of reducing both 
food and fuel.
    Mr. Russell. And wouldn't it be great if we could send 
those corn sacks, a gift from the United States of America, 
maybe to people who aren't as productive as we are?
    Now, you made a bold statement at the beginning of your 
testimony where you said that all of these biofuels have 
reduced imports on petroleum. I mean, what basis do you mount 
that on, 13 weeks of production?
    Mr. Tyner. I didn't say how large the increase was, sir. I 
said that there was a reduction in imports.
    Mr. Russell. I see. So shale energy revolution had nothing 
to do with the reduction in imports?
    Mr. Tyner. We've studied shale oil and gas and we've 
estimated the economic benefit for the country, and it is huge.
    Mr. Russell. It is a huge impact ----
    Mr. Tyner. Yes, it made--that it's ----
    Mr. Russell.--to have shale oil revolution, and it also 
bolstered our economy. I would suggest to you, sir, that the 
American way of life, the material good that we do to the 
entire world, the ability to fight disease, the ability to make 
pharmaceuticals from petroleum, there are so many good things.
    And I just, Mr. Chairman, appreciate, you know, us having 
this committee hearing today. I think we need to take a 
realistic look at all of the good that we provide the world, 
and we are not doing a bad job with the oil and gas industry.
    And with that, I yield back.
    Mr. Gosar. I thank the gentleman.
    I would like to acknowledge Mr. DeSaulnier from California. 
You are next.
    Mr. DeSaulnier. Thank you, Mr. Chairman.
    Dr. Tyner, I am struggling with coming from California and 
many years ago when I was a Republican I was actually appointed 
by Governor Wilson to the California Air Resources Board, and 
as we developed the low-carbon fuel standard, along with our 
renewable standards, and having four refineries in my district, 
I have a good relationship with the petroleum industry.
    So I am trying to figure out--and having been in many 
meetings about the low-carbon fuel standard--in California, 
although we have had issues, particularly with the refining 
process, we are getting huge investment. We have had lots of 
venture capitalists come and say they are coming to Berkeley 
Laboratory. I have been down a few times to look at these 
synthetic biofuels that they are developing, which they tell me 
they are for the DOE interventions and support. They are really 
on the cusp of being able to do some really significant things. 
This would help to cause some of the criticisms about both this 
program but low-carbon fuel standards.
    So from my perspective, although there have been challenges 
to this kind of process, both the carrot and the stick, that it 
is worth continuing to work on, knowing that it is not perfect 
in the first place.
    So, first of all, are you familiar with some of our 
struggles in California? And by the way, the low-carbon fuel 
standard was signed into law by a Republican Governor, Governor 
Schwarzenegger. So all of our hearings anticipated much of the 
conversation here today. It is different because we were 
looking at carbon reductions, which I think at the Air 
Resources Board when we did our best work, irrespective of 
whether it was a Republican administration, it was driven on 
what you got reductions either in traditional pollutants. This 
is a different approach, but it is sort of the same thing.
    So maybe you can help me with trying to understand--we are 
being pretty successful in California, and this is a process 
that is not dissimilar, and I am trying to struggle with what 
are the things we have already lived through that we could sort 
of apply to the renewable standard nationally?
    Mr. Tyner. Well, the California low-carbon fuel standard 
gives credit for every reduction ----
    Mr. DeSaulnier. Right.
    Mr. Tyner.--and that's different from the U.S. Renewable 
Fuel Standard. The Renewable Fuel Standard sets thresholds, 20 
percent for corn ethanol, 50 percent for biodiesels, 60 percent 
for cellulosic biofuels. So if you get 80 percent, you get no 
more credit. If you get 30 percent for corn, you get no more 
credit. In California, you get credit for every percentage 
reduction that your fuel achieves.
    So it's, again, a market--more market-oriented system 
that--and we've worked with the California Air Resources Board. 
We've worked with them in getting the induced land use change 
estimates that go into their standard. It's a standard that's 
being considered by other States around the country, as you 
probably know. And its advantage is that it does give credit 
for all the reductions achieved and not just surmounting a 
threshold.
    Mr. DeSaulnier. But it is more market-based ----
    Mr. Tyner. It's market-based.
    Mr. DeSaulnier.--than doing so ----
    Mr. Tyner. Right.
    Mr. DeSaulnier. In the context of that it was an evolution, 
and I am, like all of us, parochial in my own experience, but 
we did learn from going through these, including the 
drivability index when we talk to the car manufacturers. We 
want to be able to pass the standards so that the fuel doesn't 
constrain or inhibit the sale of automobiles and their 
drivability.
    So it strikes me in the context of this hearing, and again, 
from my perspective, this is an iterative process, and why 
wouldn't we continue? And maybe, Mr. Grundler, you could put 
your two cents' worth in. Probably this law needs to be 
modified, but how can we learn from other experiences both in 
States and around the world to make it work better, including 
for the marketplace?
    Mr. Grundler. My office works very, very closely with the 
California Air Resources Board across a wide variety of 
different work, trucks, cars, lawnmowers, fuels. We're very 
familiar with the California low-carbon fuel standard. It is a 
very different approach in that it is a performance standard-
based approach, whereas the Congress chose to decide very 
specific volume targets every year, which change over time and, 
as Dr. Tyner mentioned, as these thresholds.
    I think we are learning a lot from the California 
experience, and there have been some bumps along the road, but 
I think by and large it's been successful for some of the 
reasons that Dr. Tyner suggested. But it is very different from 
the law as Congress wrote it, and I'll just leave it at that.
    Mr. DeSaulnier. And I will just leave it at this as well. 
It is not--and I apologize for showing my prejudice over 
California, not if anybody is watching at home, but it seems to 
me that this is a process, and I agree with my Republican 
colleagues that we should probably look at it and revisit it to 
make it work better, including for the marketplace. But there 
are other iterations around the country and the world that seem 
to be working through, so maybe less prescriptive and more 
market-based but with the ultimate goal being the same.
    Thank you, Mr. Chairman.
    Mr. Gosar. I thank the gentleman.
    I would like to acknowledge now the gentleman from Florida, 
Mr. DeSantis.
    Mr. DeSantis. Thank you, Mr. Chairman.
    Mr. Grundler, why have the EPA's estimates of cellulosic 
ethanol production been so poor? I mean, if you go from 2010, 
2011, just is way off the base. So why is that?
    Mr. Grundler. Thank you for that question. We work very 
closely with individual producers, individual plants to--having 
made those estimates over the past few years, and we relied on 
estimates that we got directly from the producers and what 
their schedules were and what their production volumes were. 
And it turned out that those producers and that information 
that they provided us was too optimistic. We've changed ----
    Mr. DeSantis. Yes. Well, I mean, I think it is difficult to 
centrally plan this stuff. Now, you revised the definition, and 
now in 2014 there was 140 million cellulosic biofuel RINs 
generated. However, Congress had mandated 3 billion gallons, so 
is there any way that--does EPA believe there is any way that 
they will be able to generate the billions that are called for?
    Mr. Grundler. Not between now and the end of 2016.
    Mr. DeSantis. Yes. No, I think that that is right. Dr. 
DeCicco, when this was created, environment was one of the main 
things, and so, you know, it causes problems with food, energy 
price, all that, but it is, okay, you are going to get 
environmental benefit. But I think you make an effective case. 
I mean, it is actually not good for the environment, is it?
    Mr. DeCicco. That's correct. The environmental premises of 
this have turned out to be incorrect.
    Mr. DeSantis. And, Ms. Stone, you point out, I think very 
correctly, that when you are raising food prices artificially, 
you know, that has an effect. You know, someone, a blue-collar 
person in America, they are going to have to stretch their 
family budget, but you point out some of these people around 
the world, you know, if food prices go up, I don't know, 5, 10 
percent, what does that mean for someone in a really destitute 
part of the world?
    Ms. Stone. It's a significant impact. In sub-Saharan Africa 
and Asia, people spend, as I said, between 60 and 80 percent of 
their income on food, and so even small increases can mean that 
they don't have enough to feed their families.
    And I also want to emphasize what not--what that really 
means. Children who do not receive food--enough nutritious food 
before their second birthday can be permanently physically and 
mentally stunted.
    Mr. DeSantis. And it ----
    Ms. Stone. Food is ----
    Mr. DeSantis. Well, Dr. Tyner pointed out, hey, you know, 
in some of these poor areas, you know, you may have people who 
are in agriculture and they may benefit from this. And let's 
just assume that is true. In your experience, what is the 
number of people that would benefit from producing versus the 
number of consumers who would be harmed? I mean, it seems like 
you are harming way, way, way more poor people than you are 
helping poor farmers, correct?
    Ms. Stone. Yes. And in our experience, if prices of inputs 
go up for these small-holder farmers, then that outweighs any 
cost benefits they may receive. But also, many of these farmers 
are sustenance farmers. They eat most of what they grow.
    Mr. DeSantis. Mr. Loris, the price that people pay at the 
pump is higher as a result of the ethanol mandate, correct?
    Mr. Loris. Yes, that's correct.
    Mr. DeSantis. And so, you know, you are getting hit 
environmentally, you are getting hit at the grocery store, you 
are getting hit there. The quality of the gasoline, though, is 
also, I think, something interesting. What is your opinion on 
whether the fuel with the ethanol in it is better for car and 
boat engines than the purer blend?
    Mr. Loris. Well, we've seen obvious failures with some of 
these smaller engines with boats. You know, if they can bear 
higher ethanol contents, then that's fine, but we shouldn't try 
to rush and increase the allowable content of ethanol because 
of this blend wall or because we're trying to force more 
biofuels on the market. That's another unintended consequence 
of this mandate.
    Mr. DeSantis. Yes, I mean as somebody that represents a 
coastline, you know, our boaters, our fishermen, it hurts their 
engines. I mean, there is just no doubt about it, so that 
imposes costs on them if they have to replace it or do repairs.
    Look, I think the proper solution is just recognize that 
this policy was a mistake. Let's repeal the mandate. But here 
is the thing. Let's repeal all of these energy mandates. We 
will do solar, oil/gas, ethanol, everything, and let's actually 
let people compete in the marketplace. Let's give relief to 
consumers. Let's get out of this business of where people in 
Washington are picking winners and losers, dictating from on 
high. We don't do a good job of it. And let's let people make 
the decisions. But I would be fine getting rid of all of this 
in the energy market and let's just return to a free market. I 
think, ultimately, that will be better for consumers. I think 
it will be ultimately be better for the environment because I 
think it will allow innovation to really take hold.
    And with that, I yield back.
    Mr. Gosar. I thank the gentleman.
    I now acknowledge Mr. Walker from North Carolina.
    Mr. Walker. I want to pick up from where Congressman 
DeSantis left off. I want to come back to you, Mr. Loris, a 
two-part question. With RFS, it did not lower the fuel prices 
from 2010 to 2012. I would like for you to explain why you 
believe that is, and then after 2013 why it has been 
ineffective as far as reducing oil prices there. Would you mind 
addressing both of those?
    Mr. Loris. Sure. Well, the fact that ethanol is less 
energy-dense contributes to higher prices. You have to pay more 
to drive the same amount effectively, so that's contributing to 
the higher fuel prices that we pay at the pump.
    And, again, this ripples throughout the economy. You know, 
this is something that, when you pay more at the pump, you 
can't have disposable income into other parts of the economy. 
So this has tremendous ripple effects that hits consumers again 
and again.
    Mr. Walker. Sure. Ms. Stone, again, what we were just 
talking about as far as poverty and some of the needs, I have 
worked in some of the refugee camps in Europe and have seen it 
firsthand. In your testimony you describe some of the more 
unfamiliar effects of RFS. Could you explain the effects on the 
efforts to combat hunger? I know you just mentioned that, but 
could you get a little bit more background?
    Ms. Stone. I'm sorry. On the effects to combat--how the RFS 
is impacting hunger broadly?
    Mr. Walker. Correct.
    Ms. Stone. So one of the things that--in addition to food 
price, as I mentioned earlier, many people--many poor people in 
the developing world are sustenance farmers, and they rely on 
land and having secure ownership of that land to grow that 
food. Biofuels mandates for food-based biofuels incentivize 
large plantations of one crop of biofuels. And so what happens 
is these small family farmers are forced off of their land to 
make way for these large plantations. And so that directly 
impacts their ability to grow food for themselves and their 
family but also the community at large.
    Mr. Walker. Would you say that is the same or could you 
expand a little bit when it comes to clean drinking water?
    Ms. Stone. Yes. When it comes to drinking water, it does 
depend on the type of biofuel feedstock, but what we have found 
is that expanding biofuel production requires more water, and 
so less water is available to the community to grow their own 
food. It also means that there's less available for them to use 
for other basic needs such as drinking and hygiene.
    Mr. Walker. Mr. DeCicco, I have got a lengthy question 
here, about four or five lines, but I want to get it out to you 
before my time expires. In your testimony you state that corn 
ethanol lifecycle analysis claiming a 40 percent reduction in 
greenhouse gas emissions compared to gasoline was not accurate. 
Rather, your research found that corn ethanol results in no 
significant reduction of emissions. Can you take a minute and 
elaborate on that? Is that correct?
    Mr. DeCicco. That's correct.
    Mr. Walker. Okay.
    Mr. DeCicco. Yes, that's correct. The basic principle to 
look about this correctly is to realize that when biofuels are 
burned in a car, that has very little effect on how much carbon 
dioxide comes out of the tailpipe. It's a--that's just basic 
chemistry. You burn a liquid fuel, you get about the same 
amount of CO2 from the tailpipe for unit of useful energy.
    My shorthand way to, you know, have people remember that is 
that if biofuels have a benefit for climate, it's not when 
they're burned. So you can set that aside, say, okay, the 
action isn't happening at the car. In oil industry parlance, 
any potential benefit is not happening downstream.
    So you have to ask the question, okay, if there is a net 
reduction of carbon in the atmosphere, where might that happen? 
And the only place that can happen is on the land where 
feedstocks are grown. If a cornfield this year is growing corn 
that's being used for the food and feed market, it's removing a 
certain amount of carbon from the air. Now, if you take that 
corn harvest and next year shift it to make ethanol, other 
things being equal, that cornfield hasn't pulled more carbon 
out of the air. So you say where's the benefit?
    Mr. Walker. Yes.
    Mr. DeCicco. If there is a benefit, you can only find it 
with Mr. Tyner's models that try to look at these commodity 
shifts all around the world that introduces very large 
uncertainties, but at the other end of that chain, there's also 
some deforestation.
    Mr. Walker. Sure.
    Mr. DeCicco. So the bottom line is there is no direct 
emissions benefit ----
    Mr. Walker. Okay.
    Mr. DeCicco.--within the United States.
    Mr. Walker. Well, it is amazing when common sense and 
science kind of fuses together like that.
    I have one question. Dr. Tyner, do you refute the testimony 
of Dr. DeCicco, Ms. Stone, Mr. Loris? Do you disagree with 
that? And I guess if you want to expand on that as my time 
expires here, even with the right intentions, do you believe 
these programs are now flawed?
    Mr. Tyner. I do disagree with them. I think that there are 
greenhouse gas emissions savings. I think the land grab and 
things like that have not been largely attributable to 
biofuels. I've worked in 15 different developing countries and 
I've never seen that kind of action in the 15 countries that 
I've worked in. So I think there are greenhouse gas emissions 
savings. I think it's about greenhouse gas emissions.
    I think there have been food price increases, and that has 
adversely affected urban consumers, as I said, but there've 
also been positive implications. We've seen substantial supply 
response in the developing world, in sub-Saharan Africa and in 
South America, where poor farmers in those regions are growing 
more crops and getting higher incomes. There's two sides to 
that story. There's the urban side and the rural side, and we 
have to look at both sides.
    Mr. Gosar. I thank the gentleman.
    I now acknowledge the gentleman from Georgia, Mr. Carter.
    Mr. Carter. Thank you, Mr. Chairman, and thank all of you 
for being here today.
    I want to change the subject for just a second, or not the 
subject but kind of the focus. We have been focused on 
automobiles and we have been focused on the agriculture part of 
it, but I represent the coast of Georgia. I represent over 100 
miles of coastal area in Georgia. Therefore, as you can 
imagine, boating is very popular in my district. And as one who 
grew up in the district, I have spent a lot of my life on the 
water.
    And let me start with you, Mr. Loris, and ask you, you are 
aware, Mr. Loris, of the unique challenges that ethanol-blended 
fuels can present to marine engines, particularly overheating 
and engine failure, correct?
    Mr. Loris. Absolutely.
    Mr. Carter. So you are also aware that while some of the 
marine engines can--that are on the market today, they can 
utilize the E10 fuel, but if you get above that, I am not aware 
of any that would be able to utilize a blend more than E10.
    Mr. Loris. None that I know of.
    Mr. Carter. So there is a risk that is associated, and I 
hope you all understand where I am coming from. There is really 
a very serious risk that is associated with using fuels with 
ethanol in marine engines and particularly outboard engines, 
which a lot of people have outboard engines even up here, but 
particularly on the coast of Georgia, particularly when you are 
talking about being out in the ocean.
    And, you know, when you are in a boat and you have engine 
trouble, it is different than when you are in a car and you 
have engine trouble. I mean, when you are stranded out on the 
water and you have engine trouble that, you know, the weather 
can change suddenly, a number of things could happen. It is a 
serious, serious problem.
    And this is what we are running into here. So this is where 
my focus is at right now is the impact this--the real impact 
that this is having on marine engines, and it is having that 
impact now. We are having overheating. We are having engine 
failure as a result of having to use this fuel.
    Mr. Grundler, would you agree that the EPA is bound by the 
Renewable Fuel Standards to keep increasing the amount of 
ethanol that is in our fuel stocks?
    Mr. Grundler. I would disagree with that, sir.
    Mr. Carter. You would disagree that the EPA is bound to--do 
you think that the EPA is going to be attempting to increase 
the amount?
    Mr. Grundler. The job that Congress gave us was to increase 
the total amount of renewable fuels. The marketplace will 
choose ----
    Mr. Carter. That is not what I asked you. What I asked you 
was specifically do you think that EPA is going to continue to 
attempt to increase the amount of ethanol in our fuels?
    Mr. Grundler. It is not a question of ethanol. We do not 
set an ethanol entered, sir.
    Mr. Carter. Then, what is the--that is what we talked about 
all day is the fact that the Renewable Fuel Standards, that you 
are going to continually try to increase that. Now, I want you 
to understand what a dire strait this is going to put marine 
engines in and particularly people who utilize outboard engines 
and the impact that this is going to have.
    Mr. Grundler. No, I ----
    Mr. Carter. If we continue to breach the blend wall and it 
is no longer economically feasible for producers to use the 
RINs that you referred to earlier today, earlier in this 
testimony, then we are not going to have any more ethanol-free 
fuel, and boaters are just going to simply be out of luck here. 
They are not going to be able to use their outboard engines, 
and if they do, they are going to be in danger of being broke 
down out on the water. This is a serious, serious threat.
    So this is more than just the economic impact. Obviously, 
we all understand the economic impact this is going to have it. 
But this is putting people's safety at risk here.
    Mr. Grundler. I'm very sensitive to those concerns, sir. I 
come from Michigan. We do a lot of boating. I'm a boater. I'm 
aware of the risks of using high ethanol blends in outboard 
motors. That's not permitted. All boat engines today are 
designed and calibrated to use E10. And as we consider these 
standards, we do look at what the marine environment needs and 
what the marine market needs for lower ethanol blends.
    Mr. Carter. Well, you know, as you move forward, I hope 
that you will keep in mind that you have an impact. When you 
increase this, you impact the marketplace. I mean, the 
producers are not going to continue to produce the ethanol-free 
fuels if there is not a market for it, if they are being 
required to produce the blended fuels. And this is going to 
have a big impact on boaters all across the country, whether it 
be in Michigan or especially whether it be on the coast of 
Georgia.
    And this is of concern to me because, again, I reiterate, 
it is different when you get broke down in a boat than when you 
get broke down in a car.
    Mr. Grundler. I ----
    Mr. Carter. It is a big, big difference.
    Mr. Grundler. I completely get that. I've been stuck out in 
the middle of Lake Michigan.
    Mr. Carter. Well, and you ought to be stuck out in the 
middle of the Atlantic Ocean.
    Mr. Grundler. I've been there, too, sir, but not stuck 
fortunately. But I want to ----
    Mr. Carter. Well, I have been, and I can tell you, it is 
not a good feeling.
    Mr. Grundler. Thank goodness for the Coast Guard.
    But what I'd like to just point out is that the marketplace 
does have choices, and obligated parties can choose to ----
    Mr. Carter. But ----
    Mr. Grundler.--blend biodiesel rather than ----
    Mr. Carter.--with all due respect, Mr. Grundler, you have 
an impact on it. The EPA and your rules and your regulations 
have a big impact on it, and I hope you keep that in 
consideration.
    And, Mr. Chairman, I appreciate your indulgence and I yield 
back.
    Mr. Gosar. I think it would only benefit you if you ----
    Mr. Grundler. Thank you for your comments.
    Mr. Gosar.--if you worked in the Bermuda Triangle. That 
might be trouble for you.
    I would like to acknowledge the gentleman from Georgia, Mr. 
Hice.
    Mr. Hice. Thank you, Mr. Chairman, and I appreciate this 
hearing.
    Mr. Grundler, I would like to continue with you in a 
similar train of thought dealing with the likely breach of the 
blend wall. As you know, the EPA has approved E15 for vehicle 
manufacturers from 2001 to the present. However, most of the 
manufacturers are clear that they do not recommend E15 for the 
vast majority of vehicles. In fact, I have got a chart that I 
wanted to see if we could put up here that indicates just the 
number of vehicles that cannot use E15 versus those that can.
    [Slide.]
    Mr. Hice. And as you can see, it is just a handful, 
literally a handful of vehicles that could utilize E15. 
Certainly no vehicle that I have according to this chart could 
utilize E15.
    You also testified in front of the Senate Environment and 
Public Works Committee in 2013 that the blend wall had been 
reached and that, according to your testimony, ``It is not 
feasible for the system to absorb that much ethanol.'' Well, 
this fear certainly has become true now with the 2016 rule 
breaching that blend wall. And of course that raises concern.
    But here is the thing that I want to ask you specifically. 
The 2007 Energy Independence and Security does allow the EPA to 
have authority to waive the RFS requirements if--and this is a 
direct quote from the statute--``if implementation of a 
requirement would severely harm the economy or environment of a 
State, region, or the United States.''
    Now, based on the chart that we just looked at and all 
these other things that have been discussed, how can it not be 
recognized that the 2016 rule is going to have a negative 
impact on the economy?
    Mr. Grundler. We have exercised the tools that Congress 
provided to adjust the numbers in the law substantially 
downward but only to the extent that we thought was necessary. 
We put a lot of effort in--which is all described in the final 
rule. So while the final standards we believe do go above this 
blend wall, the marketplace will have choices on how to achieve 
those standards. We think they are achievable. We think we've 
done it in a responsible way.
    Mr. Hice. Well, according to the chart that we put up, you 
are going to create an enormous economic problem for the vast 
majority of vehicle owners in this country.
    Let me just ask you, Mr. Loris, a similar question just to 
get your input. What would you consider would be the economic 
impact of breaching the blend wall?
    Mr. Loris. It'll be significant. As we've seen in the past 
when we have a drought, too, you know, if these RIN prices are 
driven up, that just exacerbates all of the cost we talked 
about throughout this hearing in terms of higher prices. So not 
only will gas prices be more expensive, but you'll be paying 
more as these RIN prices increase, which we've seen in the 
past. And it speaks to the need to revise these standards and 
mandates down to zero.
    Getting rid of just the corn part of the mandate is a bad 
idea, too, because you're getting rid of the most economically 
competitive part of the mandate. As Dr. Tyner pointed out, this 
is the most mature part of the industry. So if we just leave it 
up to the mandate for cellulosic ethanol, that's the stuff that 
has difficulty becoming commercially viable and is going to be 
very prohibitive in terms of costs to meet any potential 
targets that the EPA sets.
    Mr. Hice. So say on a scale of 1 to 10, 10 being extremely 
severe, what kind of impact would you rate the breaching of the 
blend wall?
    Mr. Loris. I would say it was as high as a 10. You know, 
you never know what the market will bear. You know, and 
fortunately, we've been blessed with the shale revolution to 
have lower gas prices, so that's tampered some of the effects 
of this--the adverse effects of this mandate.
    That said, if we continue to breach the blend wall, if 
refiners are fined for not meeting any type of cellulosic 
requirements, it gets worse and worse as the targets go higher 
and higher.
    Mr. Hice. Back to you, Mr. Grundler. You testified last 
month at the Senate Environment and Public Works Committee that 
you indicated that there may be a shift of the point of 
obligation from the refiner to the blender. Do you intended to 
address this as part of the 2017 rule?
    Mr. Grundler. I believe you're referring to my boss's 
testimony in front of the Senate. We have received that as part 
of our comments to our--the rule we just finalized. People--a 
number of people have come in and suggested that we consider 
that. We decided that that is outside the scope of these annual 
rulemakings. We're considering it, but we believe such a major 
change in the regulation and the law should not be part of this 
annual rulemaking process.
    Mr. Hice. So you have no intention of addressing that 
question at all?
    Mr. Grundler. We are talking to people. We are analyzing 
the question. If we were to address it, it would be not through 
an annual RBO standard-setting process.
    Mr. Hice. Thank you, Mr. Chairman.
    Mr. Gosar. I thank the gentleman.
    I now recognize the gentleman from Vermont, Mr. Welch.
    Mr. Welch. Thank you very much, Mr. Chairman.
    I am delighted that you are having this hearing, and I 
really appreciate you waving me on. I have listened to the 
testimony that I was here for, which is quite a bit, read your 
comments, and I want to thank the witnesses for focusing on 
this. I just want to make a couple of comments.
    You know, I think that the ethanol situation has been good 
for the corn farmers who produce ethanol, and I like farmers. I 
come from a dairy State. But it is an astonishing development 
where you had this market that was created by A) a tax subsidy, 
54 cents a gallon. That has since been repealed; B) 
essentially, a tariff barrier that kept out competition from 
Brazil worth 45 cents a gallon; and then finally, a very 
unusual thing, a requirement by government that consumers 
purchase this product, the mandate.
    And it is a bit of a head-scratcher for me and developed 
with the best of intentions to try to use our agricultural 
sector presumably to cut down on greenhouse gas emissions. My 
view is that after we have seen this operate as long as we 
have, it is time to acknowledge it is a well-intended flop.
    Environmentally, I think the evidence is pretty compelling 
that at least with respect to the U.S.--I don't know about 
world markets, Dr. Tyner, and all the modeling that you are 
talking about. It is really complicated, so it makes it tough 
to be compelling. But there is a lot of water inputs that go 
into it, there is a lot of energy inputs that go into it, and 
at the end of the day, the best evidence I have seen it that 
there is more greenhouse gas that is created rather than saved.
    And then, secondly, this is good if you are a corn farmer. 
It is not good if you are a dairy farmer. You are paying higher 
feed costs. And one of the things that brought my attention to 
this was when I was traveling around northern Vermont where we 
have a lot of dairy farmers, and they were getting hammered a 
few years ago with low dairy prices and high grain prices. And 
it is just beyond, I think, comprehension to argue that with 40 
percent of the corn product is going into ethanol that the 
mandate doesn't have an impact on prices, whatever the price of 
corn is, and that fluctuates. It was up to $8. It is down quite 
a bit from that now.
    And then the next thing--so you have got the environmental 
issue that has not been achieved, the goal, you have got the 
impact on farmers. You have anybody who buys food, whether it 
is going to a grocery store or going to a chain restaurant, 
those food costs are a good deal higher, and studies I have 
seen say that our chains spend about $18,000 to $28,000 more 
per unit. And that is real money for the consumers.
    And then finally, Mr. Carter was talking about the small 
engines, and it is wrecking our chainsaws, and I am kind of 
upset about that because I had a pretty good chainsaw until 
ethanol wrecked it.
    And so, you know, I was hearing from my farmers and it got 
me concerned, I was hearing from our consumers, it got me 
concerned, and when they wrecked my chainsaw, I had to get 
involved.
    [Laughter.]
    Mr. Welch. And here I am. So my hope is that we will be 
able to build on the foundation of the work of this committee, 
and I think Congress should have a debate on this. You know, 
there is the Goodlatte-Womack-Welch-Costa bill that would 
repeal the corn-based ethanol mandate. And let's have a debate 
and see what the will of the House is.
    So I thank all the witnesses. This was tremendous 
testimony. And those consequences on food-insecure countries, I 
am so glad you are bringing attention to that. It is a couple 
of billion dollars in Guatemala. They don't have money to throw 
around. So that is a tough aspect here, too.
    So would this be one of those strange convergences of 
Democrats and Republicans, Mr. Gosar, it takes you to bring us 
together on?
    Mr. Gosar. You know what, whatever harmonics it takes.
    I have just got one question for you. And what kind of 
chainsaw do you have?
    Mr. Welch. I have a Jonsered.
    Mr. Gosar. I was just going to say that. Okay.
    Mr. Welch. Yes.
    Mr. Gosar. Well, I am going to go last.
    So, Mr. Grundler, after 2022 the RFS mandates set by 
Congress and the EISA stop increasing and discretion of the 
program with few limitations is handed over to EPA. We are only 
now a few years away from this. What plans does the Agency have 
to deal with this, and what has EPA come up with to manage 
this?
    Mr. Grundler. Sir, 2022 is quite a ways off.
    Mr. Gosar. Whoa, not really.
    Mr. Grundler. We've had a hard enough time setting 
standards, you know, one year in the future. Setting them in--
figuring out what the world is going to look like in 2022 is 
pretty challenging. So the honest answer is we have no plans on 
what the standard should look like post-2022.
    I would quibble with your characterization, though, that 
the Congress didn't provide us any direction on how to do so. 
You did. There's a long list of factors, as well as deadlines 
associated with when we need to set those standards.
    Mr. Gosar. Well, I find it interesting that, you know, in 
other committee hearings we hear about this forecasting 5, 10 
years out, and I am a businessman, I am a dentist impersonating 
a politician, so, you know, I hear this forecasting, and yet I 
turned to your testimony and yet we are not forecasting. So 
that is kind of odd to me.
    Dr. DeCicco, you are not the average person, are you?
    Mr. DeCicco. I'll leave that to others to judge.
    Mr. Gosar. No, no, no, no, no. Can you tell me a little 
bit--you were a senior fellow for what?
    Mr. DeCicco. Well, I was a senior fellow for automotive 
strategies at the Environmental Defense Fund from 2001 through 
2009.
    Mr. Gosar. So you are an actual scientist?
    Mr. DeCicco. I am, yes.
    Mr. Gosar. Dr. Tyner, are you a scientist?
    Mr. Tyner. I'm an economist.
    Mr. Gosar. So we are refereeing a match here on science 
that you are not the referee, he is, right?
    Mr. Tyner. It's not a referee on science, sir, it's a 
referee on market-mediated changes ----
    Mr. Gosar. No, no, no, no, no, no, no, because you are 
talking about models, and in the science world we take models 
and we compare them against facts to see--I mean, this is in my 
ballpark now, too. So we actually look at these modeling for 
outcomes, but then we come back to correct them based upon 
factual bases. Is that not true?
    Mr. Tyner. That's correct, and we do that all the time.
    Mr. Gosar. Well, I think economics--and I want to come back 
to the actual facts about what is happening on the ground, Dr. 
DeCicco.
    So when you come to this point, you have seen it from the 
very infancy of standards all the way to today, so you are very 
well-rounded. You don't have a bias one way or another. You 
have actually pinpointed this based on the facts, right?
    Mr. DeCicco. That's correct.
    Mr. Gosar. So let me ask you another question. You know, I 
have seen some rumors. I mean, we have kind of hedged it here. 
When we have combustion of these alternative fuels, is there 
anything that occurs that is alarming, that there is something 
else that it goes into combination that is a byproduct?
    Mr. DeCicco. Well, combustion produces a variety of 
pollutants that we need to clean up. There is traditional 
pollutants or ones that cause smog, create fine particles, and 
EPA has done really an outstanding job over the years of 
tightening the standards, you know, down so that those 
pollutants are with the best vehicles now running on 
reformulated gasoline, have standards many orders of magnitude 
of what cars were, you know, when we were kids.
    Mr. Gosar. Well, I understand, but, you know, when we look 
at the combustion of these alternative fuels, some of the 
chemistry is not exactly good, is it?
    Mr. DeCicco. Well, it's--let me put it this way. It's more 
challenging. You take a fuel like ethanol, it has some 
combustion benefits. It is a very high octane fuel, but it 
doesn't--it has less energy per gallon ----
    Mr. Gosar. Right.
    Mr. DeCicco.--so that's another issue. Environmentally 
speaking, there's no compelling reason, no reason to force an 
alternative fuel such as ethanol into the market to burn 
instead of gasoline. Reformulated gasoline today is an 
extremely clean fuel at the tailpipe. So, yes, different fuels 
have different properties, but I think the main point is that 
there's no compelling environmental reason to put ethanol at 
the point of combustion. And again, there's no CO2 benefit at 
the point of combustion. So I'll leave it at that.
    Mr. Gosar. Sounds good. Well, I am going to summarize. It 
is important for Congress and the administration to use a 
commonsense approach when dealing with these biofuels. Congress 
shouldn't be in the business of helping some industries at the 
expense of others. Causing unnecessary harm to domestic 
shipping, agriculture, food production, and other industries 
that are affected by these regulations defies common sense. The 
RFS ultimately hurts American consumers by increasing prices 
and decreasing the quality of fuel used by American consumers 
and by the majority of gas-powered equipment across America.
    Ultimately, I am an adamant supporter of free market 
principles, and I am philosophically opposed to picking winners 
and losers in the American energy sectors. I will continue to 
fight for the repeal of RFS and for the production of market-
based solutions in relation to biofuels.
    I also have biofuels from algae in my world in Yuma, 
believe it or not.
    Mr. Grundler, one last question. You understand why so many 
people have a negative image of the EPA, and I am going to 
leave you with this. Trust is a series of promises kept. Tell 
me why we should trust the EPA when we look at Flint, when we 
look at Durango, Colorado? Over and over again we see distrust 
because we see an overreaching and overbearing agency. So go 
back and look in the mirror, and I hope that you will come up 
with a whole different attitude because I am looking forward to 
seeing your boss tomorrow.
    With that, with no further conversation or questions, I 
would like to thank the witnesses for taking time today to 
appear before us. If there is no further business, without 
objection, the subcommittee stands adjourned.
    [Whereupon, at 3:48 p.m., the subcommittees were 
adjourned.]


                                APPENDIX

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